Demand for discretionary paper products will decrease, limiting revenue growth
New York, NY (PRWEB) December 17, 2014
The Paper Product Manufacturing industry has experienced relatively stable growth over the five years to 2014, with revenue anticipated to increase. However, a low recessionary base has bolstered much of this growth. Overall, the Paper Product Manufacturing industry and the Canadian forest products sector in general have declined over the past decade because of falling paper consumption and high import competition. Regardless of some negative factors, the industry has experienced moderate growth in recent years as consumer confidence has grown, which has translated to improved demand for discretionary paper products.
According to IBISWorld Industry Analyst Britanny Carter, “While revenue has recovered over the past five years, profit has contracted due to price-based competition from imports and rising input costs.” For example, paper products are manufactured using wood pulp and paper rolls and, over the five years to 2014, the world price of wood pulp is projected to grow, raising industry purchase costs and slimming margins. Profit, measured as earnings before interest and taxes, is consequently anticipated to fall, spurring manufacturers to steadily consolidate operations. Paper product manufacturers have also heavily invested in industrial machinery to bolster efficiency and improve returns.
The growth from the past five years is expected to stop in the coming years as the Paper Product Manufacturing industry is projected to contract. “Industry operators will continue to face competition from imports and profit margins will stay low despite increased manufacturing efficiency,” says Carter. Falling wood pulp prices will provide a short-term boost to profit margins, however the industry is not anticipated to return to long-term growth. In addition, consumer demand for paper products and cigarettes, a major downstream revenue source, is anticipated to continue falling. Overall, in the five years to 2019, IBISWorld forecasts that industry revenue will slowly decline at an average annual rate.
For more information, visit IBISWorld’s Paper Product Manufacturing in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry manufacturers paper products such as labels, playing cards, wrapping paper, cigarette paper, paper filters, egg cartons, food trays and other miscellaneous paper products. This industry generally produces all paper products that are not included in other paper converting industries.
Key External Drivers
Industry Life Cycle
Products &amp; Markets
Products &amp; Services
Globalization &amp; Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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